Under the new decree on gold management released on April 3, 2012, the State has the exclusive right to produce bullion gold, export gold materials and import gold materials for making bullion gold.

New decree worries private traders

“Now I still can earn some money every day from selling bullion gold. People nowadays only buy gold to hoard up as their assets. Meanwhile, as the gold prices are overly high, no one would buy gold jewelries at this moment,” Mai, the owner of a gold shop near the Ben Thanh Market in HCM City said.

“If the State prohibits private shops to trade bullion gold, I would have to shift to another kind of business,” she added.

The new decree stipulates that a legal entity will be allowed to trade bullion gold if it has the chartered capital of 100 billion dong at minimum. Nguyen Thi Ty from the gold trade company at N0. 158 Pho Co Dieu Street in HCM City, said that though the company’s sale covers the whole district 11, its chartered capital is just several billions of dong.

“With the strict regulations in the new decree, I would not be able to have such a huge capital to keep my company,” she said.

The requirement on the high chartered capital is not the only worry for private gold traders. Most of the owners of the gold shops in the Thiec Market area, Ban Co Market area, district 3 and 5, and in An Dong Market area said that they cannot satisfy other requirements stipulated in the new decree.

The decree says that a legal entity must have the tax paid for gold trade activities of at least 500 million dong per annum in the last two consecutive years. Besides, it must have the network of branches and sale points in at least three central provinces and cities.

Ty said that the demand of people for bullion gold remains very high, and they have the habit of buying gold from reliable gold shops. “We understand that the State wants to cut down the number of small gold shops to change the people’s habit of keeping gold. However, while waiting for the habit to change, where people should go to, when they want to buy gold?” she questioned.

Nguyen Thi Cuc, Deputy General Director of the Phu Nhuan Jewelery Company, known for PNJ brand, also said that the number of enterprises that can meet the newly set up requirements is really modest if compared with the high demand.

If commercial banks, which all have the chartered capital over 3 trillion dong, and have the large networks with hundreds of sale points, joins the market--there would be many gold sale points.

“However, how the market would operate after 5 pm every day, when banks finish their working hours--especially when the market fluctuates and people need to sell gold for cash?” Cuc questioned.

Even SBJ, which has the chartered capital of 250 billion dong and pays several billions of dong a year in tax, has also expressed its worry about the new regulation.

SBJ’s General Director Vu Ngoc Que Chi, said that 90 percent of the company’s revenue comes from private gold shops. If the shops have to shut down as the result of the new regulation, SBJ would lose a lot of customers.

The opportunities for commercial banks

According to the Vietnam Gold Business Association, by the end of 2011, there had been 10,000 gold shops in Vietnam, mostly located in big cities like Hanoi, HCM City, Can Tho and Da Nang. However, most of the shops have small scale, while only 10 enterprises can meet the new requirements to maintain their bullion gold trade activities.

Truong Cong Nhon, Deputy General Director of SJC Company, has also said that commercial banks now have the big opportunities to exploit the market and make profits quickly. At least 3 banks in HCM City are considering trading bullion gold.